Advice on Lifetime Income Products ‘best practice’

Mike Taylor

Managing Editor and Publisher

23 September 2025

Major superannuation industry body, the Association of Superannuation Funds of Australia (ASFA) is arguing that retirement products identified through personal advice to members considering their individual circumstances should be considered as best practice.

Responding to Treasury’s consultation paper on proposed Best Practice Principles for Superannuation Retirement Income Solutions, ASFA noted that best practice for superannuation funds would be regarded as providing members with access to a Lifetime Income Product (LIP), an account-based pension or lump sum.

However, it said that it was not entirely clear if the phase ‘providing access to’ would permit funds, and particularly those which may not offer a LIP directly, to offer a pathway to such a product under appropriate circumstances “(for example, where the member is receiving financial advice)”.

ASFA said this could see members provided with specific guidance and/or referred to an appropriate third-party provider.

“This pathway would facilitate access to LIPs for members where it is identified (through personal advice that considers their individual circumstances) that a fund’s offerings are not suitable for the member without requiring costly development of products that will not be utilised by the majority of members”.

ASFA said it believed an inflexible ‘one size fits all’ approach would fail to recognise the varying nature, scale and complexity of individual organisations, and may present a number of complexities in compliance.

ASFA said it was recommending that where references are made to providing members with access to certain products such as LIPs, the language be drafted to clarify that where a fund does not offer a product, providing a pathway to that product through personal advice would still be considered best practice.

The submission also urges Treasury against being too prescriptive about minimum draw-down behaviour.

It noted that while the consultation paper referenced many retirees not efficiently maximising the benefit of their superannuation data, ASFA survey data revealed that most people aged 60 and over died with no superannuation.

“This point demonstrates the pervasive survivorship bias in estimates of the per centage of retirees who drawdown at the minimum required rate which ignore the substantial proportion of retirees who, following a mix of minimum drawdowns, withdraw larger lump sums resulting in the closure of their superannuation accounts,” the ASFA submission said.